Ontrak, Inc. (NASDAQ:OTRK) Q3 2023 Earnings Call Transcript

Ontrak, Inc. (NASDAQ:OTRK) Q3 2023 Earnings Call Transcript November 14, 2023

Operator: Good day, and thank you for standing by, and welcome to the Ontrak Third Quarter ’23 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would like to introduce your host for today’s call, Ryan Halsted. Please go ahead.

Ryan Halsted: Thank you, operator, and thank you all for participating in today’s call. Joining me today are Brandon LaVerne, Chief Executive Officer and Chief Operating Officer; Mary Lou Osborne, President and Chief Commercial Officer; and James Park, Chief Financial Officer. Joining me today are Brandon Laverne, Chief Executive Officer and Chief Operating Officer, Mary Lou Osborne, President and Chief Commercial Officer, and James Park, Chief Financial Officer. Earlier today, Ontrak released financial results for the quarter ending September 30, 2023. A copy of the press release is available on the company’s website. Before we begin, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call, other than historical facts, are forward-looking statements.

The words anticipate, believes, estimates, expects, intends, guidance, confidence, targets, projects, and some other expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, but may involve and are subject to certain risks and uncertainties. Other factors that may affect Ontrak’s business, financial condition, and other operating results, which include, but are not limited to, the risk factors described in the Risk Factors sections of the Form 10-K and Form 10-Q as filed with the SEC. Therefore, actual outcomes and results may differ materially from those expressed or implied by these forward-looking statements. Ontrak expressly disclaims any intent or obligation to update these forward-looking statements.

With that, I’d like to turn the call over to Brandon.

Brandon LaVerne: Thanks, Ryan. Good afternoon, everybody. We’re excited to share details on our recent customer signing as well as three prospects that we feel are close to a final signature. We are experiencing noticeable momentum in our sales pipeline and believe that continued improvements in our clinical outcomes and technology solutions has resulted in increased traction with prospects. I believe the enhancements we have made to our product strategy with our WholeHealth suite of behavioral health solutions has played a major role in the business momentum we are seeing. All of us at Ontrak Health are deeply grateful to our new and existing customers for their support and shared commitment to helping improve the health and save the lives of as many members as possible.

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Q&A Session

Mary Lou will share more specifics on the new sales activity in a moment, but first let me cover highlights of some of our achievements over the past quarter. Our ongoing patient-reported outcomes study findings demonstrate that our WholeHealth+ product is resulting in improved anxiety and depressive symptom management, reinforcing our commitment to delivering durable outcomes for our members. Leveraging industry recognized assessments such as PHQ-9 and GAD-7, we’ve witnessed significant reductions in anxiety and depressive symptoms among assessed members. Notably, 60% of members demonstrated a clinically significant 5-point reduction in anxiety symptoms, and 53% showed the same reduction in depressive symptoms. Analysis of our Q3 data also demonstrates Ontrak’s ability to identify members with unaddressed behavioral health needs and coach them into care, leveraging thousands of in-network behavioral health providers is leading to new and updated diagnoses.

Across the company’s book of business, 42% of members diagnosed with substance-use disorder did not have the diagnosis showing in the prior year’s claims prior to enrollment in Ontrak’s WholeHealth+ program. Other behavioral health conditions with similar post-enrollment results include 27% for depression, 27% for bipolar disorder, 21% for anxiety, and 20% for schizophrenia. Ontrak’s ability to support the identification, engagement, and documentation of high-cost, high-risk members effectively aides healthcare payers and providers focused on improving the management of their chronically ill members with unaddressed behavioral health conditions as well as their documentation for risk-adjusted revenue. We recently released preliminary results from a retrospective observational study showing significant healthcare cost savings across Medicaid members over 24 months.

The study results demonstrate our commitment to evidence-based solutions and data-driven insights that are leading to statistically significant savings for Medicaid members that graduated from the WholeHealth+ program. Also in recent weeks, we announced a successful deployment of the TransSend Core EDI Gateway, a notable achievement that simplifies electronic data interchange, supports HIPAA compliance, and optimizes data transactions for our providers and health plan customers. This will enable us to process well over 0.5 billion claims data transactions in the coming year and significantly reduce turnaround times. During the past two quarterly calls, I summarized some of the augmented intelligence and operational enhancements we implemented during the first and second quarter of 2023.

I’d now like to highlight some of the tangible results of those implementations, each of which improves the efficiency of our care coaches and other frontline staff. Number one, our virtual assistant Eleanor continues to help deliver an increase in member retention rates through a cadence of automated calls that provide check-ins on health status, capture member needs, and schedule calls with care coaches. During Q3, we saw the efforts of that outreach continue with a 42% reduction in our no-contact disenrollment rate from the Ontrak WholeHealth+ program. Number two, the omni-channel delivery of GAD-7 and PHQ-9 assessments was launched in Q3, providing members the option to choose the method of delivery for these assessments, whether it’s SMS, e-mail, virtual assistant, or during coaching calls in an effort to ensure we are receiving the results in the most timely and efficient way possible that works for each member.

And number three, since the launch of our efforts to improve care coach caseloads in the fourth quarter of 2022, driven by adding AI capabilities and operational enhancements for administrative functions, we have now seen a collective 90% improvement in the average quarterly care coach caseloads since the launch in the fourth quarter of 2022. All of these positive developments, the new customer and sales momentum, clinical outcomes, and technology and operational enhancements, reinforced the strength of our strategy, our commitment to our customers and members, and the dedication of our employees. And now, I’d like to turn it over to Mary Lou Osborne, who has more details upon our new customer and exciting developments in our pipeline. Mary Lou?

Mary Lou Osborne: Thanks, Brandon. I’m thrilled to provide more details about our new customer agreement. Our new health plan customer will leverage our entire product suite plus 25,000 Medicaid members. We are awaiting on imminent state approval to begin the engagement this quarter with the following Ontrak solutions. I will touch on each solution. Ontrak WholeHealth+, which includes the identification of high-cost, high-acuity members with chronic comorbidities and underlying but unaddressed behavioral health conditions. This program includes specialized care coaching and provider treatment for eligible members and delivers improved clinical outcomes and significant cost savings. Ontrak Engage, which is our coaching-specific solution that identifies members who would benefit from ongoing coaching to help them address physical and behavioral health challenges without a clear need for provider intervention.

In addition to Ontrak Engage being available to all adult members, Ontrak Health will further outreach to the health plan’s most impacted members with serious mental illness to help them address their unique healthcare needs. Ontrak Access will provide additional behavioral health providers for WholeHealth+ members with prompt access and availability to care, leveraging our NCQA certification as a credential’s verification organization. Ontrak quality support for the members served, jointly collaborating with the health plan on HEDIS measures, closing critical gaps in care and improving health outcomes. And finally, the new Ontrak member portal that features specialized and tailored information delivered through our stayontrak.com website to provide educational and timely content for all the customers’ adult members on how to improve their overall well-being.